Jim Skinner Chairman of McDonald's, addresses the media in this file photo.

McDonald's pushed back on health care reform, and the White House responded by waiving certain rules for the fast-food giant. Still, in an environment of new regulations, an obesity epidemic and rising expenses for beef, coffee and other commodities, McDonald's is thriving. Chairman and CEO Jim Skinner told me business is good as customers look for value in a fragile economy. He says even with higher expenses from health care to burgers, he doesn't expect to raise prices significantly. Below is my interview with Skinner, edited for clarity and length.

Q: How is business?

A: McDonald's (MCD) is recession resistant, not recession proof. But we really have been very successful and continued to reinvest in our business over all of those years, including this current downturn. We're taking share in every area of the world. We've stuck to our game plan, which is focusing on customers and restaurants and doing a better job every day. It's paid dividends.

Q: What do customers want today?

A: The first thing is the same thing they've always wanted: great-tasting food at a great value and at the speed of McDonald's. At our business, speed is very important. People are harried in their lifestyles, and everybody's on the move. Breakfast has been important to us for 35 years. We really sort of own that day part, if you will. But the rest of our menu has proliferated around choice for our customers and the everyday affordability, particularly during these times when you look at unemployment rates of 9.6% and consumer confidence that continues to be low. Everyday affordability and value at McDonald's is extraordinarily important.

Q: What would you say about consumers in this economic environment?

A: Until people have confidence regarding the future, and for us that means confidence in being able to put meals on the table at home or buy meals away from home, consumer confidence is going to continue to be low. Yet we have been very successful in this environment because of the everyday affordability. They shouldn't get pinched at McDonald's when they're getting pinched every place else.

Q: What went on in terms of your suggestion that perhaps you would not be able to provide health insurance to hourly workers?

A: It's important to be clear that we would have never dropped our health care coverage for our people, those 30,000-plus people mentioned in the news media. But it was going to be challenging for our (insurance) carrier and other carriers to cover those mini med plans that were talked about, which cover some 1.4 million employees throughout the U.S. at other companies. Without a waiver, that particular carrier may not have been able to cover our people, but we would have found someone who could. We are always going to provide the benefits and opportunity for our employees, regardless of what the administration does.

Q: We've seen a rise in commodities prices. Are you expecting to pass that on to the consumer? What are you doing to offset rising prices for ground beef, coffee, etc.?

A: We have a very good relationship with our suppliers, and we worked very hard to lock in prices for 2011 around a number of items. We do it so that we can lock in a reasonable food and paper cost for our franchisees. Over the last couple of years here in the U.S., our price increases have averaged somewhere around 1% to 1.5%. And if we were at 1.5% in 2011, or 2%, depending on what's going on with inflation, that would probably be business as usual for us.

Q: Have people traded down in this recession?

A: I always like to say that people are not trading down, they're trading in because we did better before the recession. I don't know when it started exactly, but we're in our seventh year of same-store sales growth. So our business model was very successful. We had everyday affordability then, and we continue to have everyday affordability.

Q: With states squeezed in terms of their budgets and looking for revenue, are you worried about a fat tax?

A: I pay attention to legislative activity around revenue generation because I think people are needy and greedy, and they want to put the onus on somebody. It could be an issue. I don't worry about it. I think people will have common sense and realize that you can't take one part of the food chain and put an onerous taxation on them because you're trying to legislate people's behavior in the interest of raising revenue. It's wrong-headed. Even our legislators will have enough common sense to figure out that's not the way to go.

Q: Everyone's focused on obesity. Can McDonald's be part of the solution?

A: I like to say that we've been part of the solution. We've done more around our menu choice and variety for our consumers. It fits into their balanced, active lifestyle, so yes. We have a responsibility to be part of the solution. We sell food.

Q: What did you do?

A: Take a look at the choice on the Happy Meals for kids: apples and the opportunity for them to have 1% milk. Look at salads, grilled chicken, entrees across the menu that provide a very nutritionally balanced meal. You get it done through choice, not through prescribing behavior or convincing somebody that they should eat a Big Mac, large fry and a Coca-Cola every day. We also work very closely with the health organizations and others, including the first lady and Let's Move. We're also the leader in nutritional information.

It's not my job to get up in the morning and prescribe to people what they eat, but I should give them a choice that makes them feel good about their decision and, more importantly, fits into the appropriate nutritional guidelines for them.

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